Retailers tell Amazon to start charging tax

Mike Luttrell, 21st March 2011

When it comes to shopping online, many consumers head immediately to sites that don't charge sales tax, which isn't sitting well with retailers that have to charge tax.
The majority of states require that online retailers must charge sales tax only if they have an actual brick-and-mortar presence in the state of the customer making the purchase. So, if you go to BestBuy.com and you live in Texas, you'll have to pay tax just like if you went to the local Texas Best Buy.

So retailers that exist exclusively online are not required to collect tax, except to customers in states with specific laws to the contrary, or where the company is located. So for example, only Kansas, Kentucky, New York, North Dakota, and Washington (Amazon's headquarters) residents are required to pay tax on Amazon.com orders.

Everyone else gets to buy their products tax-free, but are technically supposed to pay taxes for all these purchases when they file their taxes every year. No one does this.

A group called the Alliance for Main Street Fairness is taking a strong stand against this perceived injustice, and several big box retailers - like Best Buy, Walmart, and Sears - have joined in the fight. The alliance is mostly focused on representing the voices of small, mom-and-pop stores, but feels the tax disparity issue is something that needs to be addressed.

"It's fair to say that both large and small businesses are active" in the call-to-arms, said alliance spokesperson Danny Diaz.

Amazon's official response to such complaints has always been that it follows the law. It does. No one is questioning that. And seriously, unless the law changes, a few whines from Best Buy and Walmart are unlikely to change anything. A lot of whines, though, could indeed start changing the legal landscape.